<p>My daughter just got accepted to Pratt Institute and is being offered a $12,000/year scholarship. However, that still leaves a difference of $29,000 in the cost of attending there. How are middle income families handling costs without getting in debt up to their eyeballs?</p>
<p>Home equity loans are good.
Also some schools have payment plans that let you spread tuition over the whole year.
Make sure daughter gets a summer job.
Cut back on dining out and extras.
And if it is really too much, look for a cheaper school.</p>
<p>We're getting in debt up to our eyeballs</p>
<p>Here's what I just did today - it actually made me feel much better about the whole thing. I asked myself how much debt I am willing to tolerate in terms of monthly payments. I decided that I could deal with a $500/month payment.</p>
<p>I went to the loan caculator here: <a href="http://finaid.org/calculators/scripts/loanpayments.cgi%5B/url%5D">http://finaid.org/calculators/scripts/loanpayments.cgi</a></p>
<p>Figuring 8.5% interest (the new fixed rate for PLUS loans), I figured that for a $500 monthly payment, I could borrow $40,000. Divide by 4, and it works out to a plan to borrow $10K per year. Pay the remainder from current income & assets. </p>
<p>Now I don't have the $29K annual outlay that you are faced with -- but the rationale is the same. If we want to buy the designer education for our kid, then we need to finance it just as we would a new car or a bigger house. By "designer" education I mean anything that costs more than a low-end, in-state public -- the bottom line is that the reason we want the more pricey education is that we think it's worth it.</p>
<p>thanks for this tip , calmom ! Your perspective is a sane way to handle looking at the payments .</p>
<p>Calmom:
If you start paying on the loans immediatedly (inschool), you'll find that after 4 years of payments. By immediate amortization, What you owe is considerably less than the $40,000 in total borrowing, especially if you target a payment higher than the amortizing table. For example: Start, $500 payments in the first year, and the remainder what is borrowed in the first year ($10,000) will be approx $4000 at the start of the 2nd year. The problem is a cash flow problem. That mydear, is the trick.</p>
<p>Thanks for the added suggestion -- I realize that I was looking at a very simple model and that I wasn't including amortizing the loan, and of course there will be a declining balance. However, keep in mind that during the first years of the loan, I also am paying out some cash towards my daughter's college -- so you might look at it this way:</p>
<p>Year#1 -- I borrow $10K and begin payments of $125/month
The remaining $375/month equates to $4500 cash available to toward my daughter's tuition. It happens that with financial aid, I need to come up with $16,500 for the first year -- but as my daughter will be leaving the state and will not have a car at college, I can drop her from my car insurance (net savings approx. $1000). Also, the $16.5K includes the cost of her meal plan at school; meanwhile, I am not feeding her at home -- easily a savings of $150/month over 9 months while she is away - another $1350 in savings. $10,000 borrowed + $4500 paid out + $2350 saved from reduced expenses = $16,850 -- making things relatively painless for the first year. </p>
<p>Although things get tighter each year, the financial aid system will allow my daughter to borrow more in later years, and her earning capacity through summer jobs & campus employment/ work study should increase as she matures. I don't actually get hit with the full brunt of the $500/monthly loan payment until the last half of my daughter's senior year -- but the good news is that point I am off the hook in terms of providing financial support for her -- so in year #5 - when daughter has graduated, I will have reduced expenses overall - and at that point can consider various options. </p>
<p>For example, I could keep on paying at $500/month; or, since I am no longer providing financial support to my daughter, I can start accellerating payments at that point; or, if interest rates have stabilized or gone down, I can refinance the 8.5% fixed rate loan with a different lender at a lower rate. </p>
<p>I realize that my model is over-simplified because I am not accounting for amortization or declining balancees, nor have I accounted for the fact that PLUS loan payments don't begin immediately - usually the first payment is due in February or March of the year that the money was borrowed. I'll have to spend more time with a calculator & spreadsheet to figure out the best plan for me. But the point is that it is all manageable, without my having to make huge sacrifices in my already very modest lifestyle.</p>
<p>Really, try to find alternatives to that amount of debt! </p>
<p>Junior college for 2 years, AP credit, another college, etc. Paying back that much is just crushing and the payback in terms of a higher paying job may not be there. </p>
<p>The people who will buy the debt from the colleges do not care what it was for and whether or not it was worth it-they just want the payments. </p>
<p>Ask the school for additional consideration given your circumstances and don't be sucked into something you can't afford. Federal student loans will be your daughter's obligation and they must be repaid, even if the lender has to garnish future social security payments of the student.</p>
<p>momsshocked-
We are in a similar situation. My son is also going to Pratt and although he got a smaller merit scholarship, he got a small grant as well (which was ridiculously small, and I appealed, so now it's just small). </p>
<p>Anyway, we are also looking at massive loans and I'm confused as to the best way to combine them - that is, PLUS, home equity, student "alternative" loan, stafford, etc. I am also trying to look at it as monthly payments that hopefully will still be manageable by the third or fourth year.</p>
<p>Any suggestions about loan combinations? What about getting a PLUS loan through a bank which offers an interest discount for automatic payments?</p>
<p>Thanks-</p>
<p>where else can students get financial aid from other than the college? does anyone know any good websites for scholarships or aid, etc.??</p>
<p>Outside lenders, Credit Unions, and banks are another great source for student educational loans. However make sure they are federal loans, versus private loans. Federal loans offer lower interest rates compared to private loans which cannot be consolidated with federal loans and overall have higher interest rates and will cost much more in the long run. It is possible to consolidate private loans with other private loans you may have, however the interest rate will vary and few lenders will consolidate them.</p>
<p>If you do end up obtaining a loan from these other sources be sure to keep a few questions in mind.
1. Are they willing to sell the loans down the road after the student graduates? (This is required many times if you want to consolidate federal loans from various lendors)
2. Do they offer discounts for consecutive payments on time?
3. Do they offer discounts for direct payment from checking accounts?
4. Do they have multiple payment options for students?
Many times parents and students dont know the right questions to ask, especially if the parents didnt attend college or if this is the first child they are sending off to college. College costs alot more these days and it appears it will continue to rise given the current administration. Its important to know the facts before committing a young student to such a large financial responsibility.</p>
<p>I am another mom shocked by pratt fin aid they gave my daughter the worst package of all 6 schools shes been accepted to, but she still wants to go there, which means loads and loads of loans. I had a low EFC, but I guess it doesnt really matter to them that much.</p>
<p>Art Mom how did you appeal the package? I want to do the same thing, but dont know how to do it.</p>
<p>Sometimes it can be helpful to meet with the FAid office, if you live near enough. It helps if you can show expenses they may not have considered, such as unreimbursed medical expenses & educational loans. Some schools will also review & consider financial offers made by other "competing" schools in deciding whether to use "professional judgment" and adjust your award at all.
There are some threads about this topic but there are no guarantees as to whether any school will make any adjustments & how much it may change. Generally, you have nothing to lose & all they can do is say, "No, sorry, the package stays the same."
Oh yeah, calling as soon as possible is best, so they still have some funds available if they decide any adjustment is appropriate--as time goes on more & more funding is committed. Also, sometimes there are funds for continuing students, but the competition is generally pretty fierce, so not a good thing to count on.</p>
<p>MaStudent: By federal loans, are you referring to Fannie Mae and Nellie Mae? Otherwise, don't the federal ones like Stafford and Perkinds have to be given out by the school?</p>
<p>Costelle,
I called the financial aid office and asked them to re-evaluate the package based on 1. They did not meet our financial need based on the FAFSA (even though our EFC is fairly high) and 2. to consider the fact they we live in the NYC metropolitan area, where the cost of living is very high. I added that she (the financial aid officer) knows for herself, that her salary would go a lot farther in different parts of the country. A couple of days later, we checked Fast Awards, and it was revised. They made up the rest of of our financial need by adding to the Pratt Grant, (the merit scholarship stayed the same), and by adding Work Study which I had requested, then realized might be a mistake for freshman year. Anyway, it's not a lot more, but it's something, and is worth a try. We will still have massive loans. I regret that I didn't add the fact that our medical out of pocket expenses are quite high, but from what I've read on this site going back a second time isn't going to add anything.
HTH</p>
<p>Costelle -
I just realized - we're chatting on the Art College discussion as well!</p>
<p>Art Mom,
Yes, I know, well, thats because our kids are both going to Pratt! Thank you for the answer about how to appeal the package. I am still waiting for fin aid from SAIC and SVA, as soon as I have it, Ill call Pratt and talk to them. </p>
<p>So you live in NYC? Thats lucky! Imagine, well be flying from St. Louis for the accepted students day. I am actually moving to NYC this summer to be close to my daughter. </p>
<p>Did you already send them the deposit? Or planning to do everything on April 29th? Maybe we will see each other there, you can pm me if you want. Of course I realize itll probably be so hectic there.</p>
<p>HImom, thank you, too, for the helpful advice.</p>
<p>TheGFG- Yes sorry I should have clarified. The federal govt offers financial in two forms..1. through the money they give to the colleges/universities which inturn becomes part of a students aid package and 2. through direct loans offered by lendors such as NellieMae, SallieMae, and Citibank (just a few of many, which the student has to apply for outside of the money awarded by the college.</p>